BY NOW, most people would have heard of United States President Donald Trump’s retaliatory tariffs and their effects on the global economy.
The idea is that if a country has a trade surplus of 15% on US trade (either due to tariffs or non-tariff measures) then the US will charge that country with 15% tariffs to off-set the imbalance.
Anyone who likes the notion of free trade and hates autarky despises this, partly for ideological reasons and partly because it damages the world economy. And make no mistake, these tariffs will financially hurt everybody, including many Americans and I would assume, a few Filipinos as well. It may even trigger a recession, which I believe Trump is prepared for.
But as painful as the results of the tariffs may be financially, they are necessary militarily and politically. Some sneer that the tariffs are meant to bring back textiles, toaster manufacturing or low-end industries back to the US. Although this is possible, that is not the goal.
The real objective is to bring back pharmacological manufacturing, ship building, semiconductors and any other industry deemed in the United States’ (and its allies’) national interest.
It was free trade that drove Western manufacturing from Europe and the US to China, based on the assumption that if China becomes rich, it will become a liberal democracy. That turned out to be delusion, and now China can mass produce ships and weapons, while the U.. is reliant on a delicate global supply chain.
For Trump and some of his supporters, bringing manufacturing back to the US is a necessity. The real question is, will it work?
I really don’t know, and I think no one knows for sure. The tariffs are a big risk, and will undermine many markets in the foreseeable future. But I think the era when America can afford to be generous with its economic assets has passed, and the Americans (and the world) should move on./PN
